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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     Nos.     4313-4314     OF     2012      (Arising out of SLP (C) Nos. 34627-34628 OF 2010)

  M/s Best Sellers Retail (India) Pvt. Ltd.              … Appellant

Versus

M/s Aditya Birla Nuvo Ltd. & Ors.                … Respondents

WITH

CIVIL     APPEAL     No.     4315     OF     2012      (Arising out of SLP (C) No. 34839 OF 2010)

  A.C. Thirumalaraj                                              … Appellant

Versus

M/s Aditya Birla Nuvo Ltd. & Ors.                … Respondents

J     U     D     G     M     E     N     T   

A.     K.     PATNAIK,     J.   

Leave granted.

2. These are appeals by way of special leave under Article  

136 of the Constitution of India against the judgment and  

order dated 25.08.2010 of the High Court of Karnataka in  

MFA No.4060 of 2010 and in M.C. No12036 of 2010 and in  

M.C. No.12036 of 2010.

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3. The relevant facts briefly are that Aditya Birla Nuvo  

Ltd., respondent no.1 in both the appeals, filed a suit O.S.  

No.1533 of 2010 against Liberty Agencies, a partnership  

firm and its partners, in the Court of the City Civil Judge at  

Bangalore.   The case of the respondent no.1 in the plaint  

was as follows: The respondent no.1 was engaged in the  

business of readymade garments and accessories under  

various reputed brand names and in the year 1995 had  

appointed Liberty Agencies as an agent to conduct its  

business of readymade garments and accessories with the  

reputed brand name ‘Louis Philippe’.  Thereafter, on  

02.03.2005 respondent no.1 entered into a fresh agreement  

with Liberty Agencies under which Liberty Agencies agreed  

to sell the products of the respondent no.1 in the suit  

schedule property and also agreed to retain the possession  

of the suit schedule property until the expiry of the term of  

agreement and Liberty Agencies was not to sell any other  

articles or goods other than that supplied by the respondent  

no.1.  Under the agreement dated 02.03.2005 (for short ‘the  

agreement’), Liberty Agencies was entitled to a fixed  

commission of Rs.7,50,000/- per month and by an  

addendum dated 01.07.2008 the fixed commission payable  

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to Liberty Agencies was increased to Rs.9,62,500/-.  

Thereafter, the respondent no.1 notified to Liberty Agencies  

various breaches of the terms and conditions of the  

agreement but Liberty Agencies did not set right the  

breaches.  As a result, the respondent no.1 suffered huge  

financial losses.  The respondent no.1 issued a legal notice  

on 06.02.2010 calling upon Liberty Agencies to comply with  

the terms of the agreement.  Liberty Agencies, however, sent  

a letter dated 26.02.2010 claiming that the constitution of  

the partnership firm has changed and that its partner A.C.  

Thirumalaraj had retired and that A.C. Thirumalaraj as the  

owner of the suit schedule property had terminated the  

tenancy of the suit schedule property in favour of Liberty  

Agencies and initiated a collusive eviction proceeding with  

an intention to defeat the claim of the respondent no.1.  The  

respondent no.1 thus prayed for specific performance of the  

agreement and in the alternative for damages for expenses  

and losses amounting to Rs.20,12,44,398/- if the specific  

performance of the agreement was refused by the Court.   

4. Along with the suit, respondent no.1 also filed an  

application under Order 39 Rules 1 and 2 read with Section  

151 of the Code of Civil Procedure (for short ‘the CPC’)  

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praying for a temporary injunction restraining the  

defendants from leasing, sub-leasing, alienating or  

encumbering the suit schedule property in any manner  

pending disposal of the suit.  Liberty Agencies and A.C.  

Thirumalaraj filed their objections to the application for  

temporary injunction and stated, inter alia in their  

objections that the possession of the suit schedule property  

had been delivered to Best Sellers Retail (I) Pvt. Ltd.  The  

Additional City Civil Judge heard the parties and by order  

dated 24.04.2010 allowed the application for temporary  

injunction and restrained Liberty Agencies and its partners  

including A.C. Thirumalaraj from leasing, sub-leasing,  

alienating or encumbering the suit schedule property in any  

manner pending disposal of the suit.   

5. Aggrieved, A.C. Thirumalaraj filed a Miscellaneous  

Appeal under Order 43 Rule 1 of the CPC against the order  

of temporary injunction before the High Court.  While the  

Miscellaneous Appeal was pending, it was brought to the  

notice of the High Court in I.A. No.1 of 2010 that in spite of  

the temporary injunction granted in favour of the  

respondent no.1, A.C. Thirumalaraj and Best Sellers Retail  

(I) Pvt. Ltd., were opening a shop in the suit schedule  

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property in the name of ‘Jack & Jones’  and by an order  

dated 16.07.2010 the High Court restrained Best Sellers (I)  

Pvt. Ltd. from carrying on business in the suit schedule  

property until further orders of the High Court.  Best Sellers  

Retail (I) Pvt. Ltd. then filed an application M.C. No.12036 of  

2010 for vacating the interim order dated 16.07.2010.  By  

the impugned judgment, however, the High Court dismissed  

the Miscellaneous Appeal and rejected the appeal for  

vacating the interim order but directed the respondent no.1  

to give an undertaking to the trial court that in case  

respondent no.1 fails in the suit, it will compensate the loss  

to A.C. Thirumalaraj and Best Sellers Retail (I) Pvt. Ltd. for  

not using the suit schedule property.  Aggrieved, A.C.  

Thirumalaraj and Best Sellers (I) Pvt. Ltd. have filed these  

Civil Appeals.

6. Mr. Altaf Ahmed and Mr. A.K. Ganguly, learned senior  

counsel appearing for the two appellants, submitted relying  

on the decision of this Court in Kishoresinh Ratansinh  

Jadeja v. Maruti Corporation & Ors. [(2009) 11 SCC 229]  

that while passing an order of temporary injunction under  

Order 39 Rules 1 and 2 CPC, the Court is to consider (i)  

whether the plaintiff has a prima facie case; (ii) whether  

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balance of convenience is in favour of the plaintiff; and (iii)  

whether the plaintiff will suffer irreparable loss and injury if  

an order of injunction was not passed.  They submitted that  

the respondent no.1 itself has claimed damages of  

Rs.20,12,44,398/- as alternative relief in the event the suit  

for specific performance of the contract is not decreed.  They  

argued that as the plaintiff itself had made a claim for  

damages for the alleged breach of the agreement by the  

defendants, the Court should not have granted the  

temporary injunction in favour of the plaintiff.   

7. Learned counsel for the appellants further submitted  

that Section 14(1) of the Specific Relief Act, 1963 provides in  

clause (b) that a contract which runs into such minute or  

numerous details or which is so dependent on the personal  

qualifications or volition of the parties, or otherwise from its  

nature is such, that the court cannot enforce specific  

performance of its material terms, such a contract cannot  

be specifically enforced.  They submitted that similarly  

Section 14(1) in clause (d) provides that a contract, the  

performance which involves the performance of a  

continuous duty which the court cannot supervise, is a  

contract which cannot be specifically enforced.  They  

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submitted that the agreement between Liberty Agencies and  

respondent no.1 is a contract of agency and is covered  

under clauses (b) and (d) of Section 14(1) of the Specific  

Relief Act, 1963 and is one which cannot be specifically  

enforced.  They submitted that Section 14(1) of the Specific  

Relief Act, 1963 in clause (c) further provides that a contract  

which is in its nature determinable cannot be specifically  

enforced.  They argued that on completion of six years from  

the date of the agreement, Liberty Agencies could terminate  

the agreement and the six years period had expired in the  

year 2011 and hence the Court cannot specifically enforce  

the contract.  They submitted that Section 41 (e) of the  

Specific Relief Act, 1963 clearly provides that an injunction  

cannot be granted to prevent breach of a contract, the  

performance of which would not be enforced.

8. Learned counsel for the appellants cited the decision  

in Indian Oil Corporation Ltd. v. Amritsar Gas Service & Ors.  

[(1991) 1 SCC 533] in which this Court has held that a  

contract which is in its nature determinable cannot be  

enforced by the Court.  They also cited the decision in  

Percept D’Mark (India) (P) Ltd. v. Zaheer Khan & Anr. [(2006)  

4 SCC 227] in which this Court has held relying on the  

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judgment of the Chancery Division in Page One Records Ltd.  

v. Britton [(1968) 1 WLR 157: (1967) 3 All ER 822], that  

where the totality of the obligations between the parties give  

rise to a fiduciary relationship injunction would not be  

granted because the performance of the duties imposed on  

the party in the fiduciary relationship could not be enforced  

at the instance of the other party.

9.  Learned counsel for the appellants further submitted  

that the agreement between Liberty Agencies and the  

respondent no.1 was an agency agreement and it did not  

create any interest whatsoever in the suit schedule property  

and, therefore, the respondent no.1 was not entitled to any  

injunction restraining the owner of the suit schedule  

property from dealing with the property in any manner with  

a third party.  They submitted that in any case since the  

defendants had clearly stated in their objections to the  

application for temporary injunction that possession of the  

suit schedule property had already been delivered to a third  

party, Best Sellers Retail (I) Pvt. Ltd., the trial court should  

not have granted any injunction without the third party  

being impleaded as a defendant.  Learned counsel for the  

appellants submitted that the interest of the third party has  

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been totally ignored by the trial court and the High Court  

and this is a fit case in which the order of temporary  

injunction should be set aside.

10. Mr. K. K. Venugopal, learned senior counsel appearing  

for the respondent no.1, on other hand, submitted that  

under clause B-2 of the agreement, Liberty Agencies had  

given a warranty that the suit schedule property is owned  

by it and that it will retain possession of the suit schedule  

property until the expiry of the agreement.  He submitted  

that under clause D of the agreement the duration of the  

agreement was for a period of twelve years from the date of  

the agreement and this period was to expire in 2017 and,  

therefore, it is not correct, as has been contended by the  

learned counsel for the appellants, that the period of the  

agreement has expired.  He argued that under clause E-2 of  

the agreement only the respondent no.1 company had the  

right to terminate the agreement by giving a written notice  

of not less than three months after the end of six years from  

the date of the agreement and hence Liberty Agencies had  

no right to terminate the agreement.  He submitted that no  

contention can, therefore, be raised on behalf of Liberty  

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Agencies that the contract was determinable in nature or  

that the contract had expired.  

11.  In reply to the contention that under Section 14(1)(b)  

and (d) of the Specific Relief Act, 1963 the agreement cannot  

be specifically enforced, Mr. Venugopal cited Bowstead and  

Reynolds on Agency for the proposition that in exceptional  

cases specific performance of a contract of agency can also  

be decreed by the Court.  He argued that Section 42 of the  

Specific Relief Act, 1963 makes it abundantly clear that  

where a contract comprises an affirmative agreement to do a  

certain act, coupled with a negative agreement, express or  

implead, not to do a certain act, the circumstances that the  

court is unable to compel specific performance of the  

affirmative agreement shall not preclude it from granting an  

injunction to perform the negative agreement.  He also cited  

the decision of the Chancery Division in Donnell v. Bennett  

reported in 22 Ch.D. 835 where it has been held that where  

there is a negative clause in the agreement, the Court has to  

enforce it without regard to the question of whether specific  

performance could be granted of the entire contract.  He  

referred to clause B-5 of the agreement which provides that  

Liberty Agencies shall only sell the products supplied by the  

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respondent no.1 company and shall not sell any other  

articles/products manufactured by any other  

person/Company/Firm in the premises during the period of  

the agreement unless approved by the respondent no.1  

company.  He submitted that this is not a case where the  

appellants are entitled to any relief from this Court under  

Article 136 of the Constitution of India.

12.  It is not necessary for us to deal with the contentions  

of learned counsel for the parties based on the provisions of  

Sections 14, 41 and 42 of the Specific Relief Act, 1963  

because Section 37 of the said Act makes it clear that  

temporary injunctions are to be regulated by the CPC and  

not by the provisions of the Specific Relief Act, 1963.  In  

fact, the application for temporary injunction of respondent  

no.1 before the trial court is under the provisions of Order  

39 Rules 1 and 2 read with Section 151 of the CPC.  It has  

been held by this Court in Kishoresinh Ratansinh Jadeja v.  

Maruti Corporation & Ors. (supra) that it is well established  

that while passing an interim order of injunction under  

Order 39 Rules 1 and 2 CPC, the Court is required to  

consider (i) whether there is a prima facie case in favour of  

the plaintiff; (ii) whether the balance of convenience is in  

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favour of passing the order of injunction; and (iii) whether  

the plaintiff will suffer irreparable injury if an order of  

injunction would not be passed as prayed for.  Hence, we  

only have to consider whether these well-settled principles  

relating to grant of temporary injunction have been kept in  

mind by the trial court and the High Court.  

13.  On a reading of clause B-2 of the agreement, we find  

that Liberty Agencies had given a warranty that the suit  

schedule property was owned by it and that it will retain the  

possession of the suit schedule property until the expiry of  

the agreement.  Clause D of the agreement clearly stipulated  

that the duration of the agreement shall be for a period of  

twelve years from the date of the agreement unless  

terminated in accordance with the provisions of the  

agreement.  Clause E-2 further provides that respondent  

no.1 and not Liberty Agencies could terminate the  

agreement by giving a notice of not less than three months  

after the end of six years from the date of the agreement and  

respondent no.1 had not terminated the agreement under  

this clause.  Before the expiry of six years from the date of  

the agreement, Liberty Agencies sent the letter dated  

26.02.2010 to the respondent No.1 committing a breach of  

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clause B-2 of the agreement which provided that Liberty  

Agencies will retain possession of the suit schedule property  

until the expiry of the agreement.  This was the breach of  

the agreement which was sought to be prevented by the trial  

court by an order of temporary injunction.  The trial court  

and the High Court were thus right in coming to the  

conclusion that the respondent no.1 had a prima facie case.

14.  Yet, the settled principle of law is that even where  

prima facie case is in favour of the plaintiff, the Court will  

refuse temporary injunction if the injury suffered by the  

plaintiff on account of refusal of temporary injunction was  

not irreparable.  In Dalpat Kumar & Anr. v. Prahlad Singh &  

Ors. [(1992) 1 SCC 719] this Court held:

“Satisfaction that there is a prima facie case by  itself is not sufficient to grant injunction.  The  Court further has to satisfy that non-interference  by the Court would result in “irreparable injury” to  the party seeking relief and that there is no other  remedy available to the party except one to grant  injunction and he needs protection from the  consequences of apprehended injury or  dispossession.  Irreparable injury, however, does  not mean that there must be no physical  possibility of repairing the injury, but means only  that the injury must be a material one, namely,  one that cannot be adequately compensated by  way of damages.”

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15.  In the present case, the respondent no.1 itself had  

claimed in the plaint the alternative relief of damages to the  

tune of Rs.20,12,44,398/- if the relief for specific  

performance was to be refused by the Court and break-up of  

the damages of Rs.20,12,44,398/- claimed in the plaint was  

as follows:

“I.  Net Book stock amount on 28.02.2010 is  Rs.1,15,97,638/-.

II.Loan amount due as on 27.01.2010 is  Rs.44,81,584/-.

III. Amount due as per Statement of Accounts  as on 28.02.2010 is Rs.20,65,176/-.

IV. Projected Loss of profit on sales, for the  balance 7 year term of the Agency  Agreement amounts to a sum of  Rs.10,31,00,000/-.

V. Loss of Goodwill, Reputation including  amount spent on advertisement  Rs.2,00,00,000/-.

VI. Loss of amount which Plaintiff would  incur for relocating the store to other place  in the Brigade Road, Bangalore and to  continue its business for rest of the term 7  years would amount to Rs.6,00,00,000/-  along with simple interest at the rate of  24% p.a. from the date of payment till  realization as the same being a  commercial transaction.”

16. Mr. Venugopal, learned counsel appearing for the  

respondent no.1, however, submitted that future  

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profits and loss of goodwill of the respondent no.1  

cannot be calculated in terms of the money, but the  

aforesaid statement of damages claimed by the  

respondent no.1 in the plaint would show that the  

respondent no.1 has itself calculated a projected loss  

of profit for the balance seven year term of the  

agreement as Rs.10,31,00,000/- and has also  

assessed loss of goodwill at Rs.2,00,00,000/- besides  

the loss of Rs.6,00,00,000/- in relocating the store to  

another place in Brigade Road, Bangalore.

17.  Despite this claim towards damages made by the  

respondent no.1 in the plaint, the trial court has  

held that if the temporary injunction as sought for is  

not granted, Liberty Agencies may lease or sub-lease  

the suit schedule property or create third party  

interest over the same and in such an event, there  

will be multiplicity of proceedings and thereby the  

respondent no.1 will be put to hardship and mental  

agony, which cannot be compensated in terms of  

money.  Respondent no.1 is a limited company  

carrying on the business of readymade garments and  

we fail to appreciate what mental agony and  

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hardship it will suffer except financial losses. The  

High Court has similarly held in the impugned  

judgment that if the premises is let out, the  

respondent no.1 will be put to hardship and the  

relief claimed would be frustrated and, therefore, it is  

proper to grant injunction and the trial court has  

rightly granted injunction restraining the partners of  

Liberty Agencies from alienating, leasing, sub-leasing  

or encumbering the property till the disposal of the  

suit.  The High Court lost sight of the fact that if the  

temporary injunction restraining Liberty Agencies  

and its partners from allowing, leasing, sub-leasing  

or encumbering the suit schedule property was not  

granted, and the respondent no.1 ultimately  

succeeded in the suit, it would be entitled to  

damages claimed and proved before the court.  In  

other words, the respondent no.1 will not suffer  

irreparable injury.  To quote the words of Alderson,  

B. in The Attorney-General vs. Hallett [153 ER 1316:  

(1857) 16 M. & W.569]:  

“I take the meaning of irreparable injury to be  that which, if not prevented by injunction, cannot  be afterwards compensated by any decree which  the Court can pronounce in the result of the  cause.”

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18. For the aforesaid reasons, we set aside the order of  

temporary injunction passed by the trial court as  

well as the impugned judgment and the order dated  

16.07.2010 of the High Court.   The appeals are  

allowed with no order as to costs.             

.……………………….J.                                                            (A. K. Patnaik)

………………………..J.                                                            (Swatanter Kumar) New Delhi, May 08, 2012.  

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